JDSU president Alan Lowe exuded confidence about opportunities for CCOP in 2013, not only because the June quarter will see improvements as telecom budgets are finalized and pent up demand is released, but also because new CCOP products are gaining traction. Highlights from Lowe’s presentation include:
-CCOP currently has its largest ROADM design pipeline in the company’s history with 18 customer engagements (compared to 6 in 2012).
-NEMs & carriers want to customize products like TrueFlex 1X20 ROADM and Super Transport Blades to add agility to their network infrastructures.
-CCOP is excited about opportunities it is seeing in the $1.9 billion datacom market that grows at a slightly faster rate (10-15%/year) than the telecom market (9-12%/year).
-JDSU gesture recognition solutions will be in a next generation gaming platform that will generate double the value to JDSU compared to its first solution. Its gesture recognition technology will also be incorporated into consumer electronics, PCs and tablets that have much larger shipment potential (250-300M units/year) compared to gaming consoles (10-20M units/year).
-Commercial lasers continue to be driven by lasers for both macro and micro machining. Amada is exploring new uses for macro lasers with JDSU and micro machining is driven by the need for precision and accuracy in the manufacturing of small consumer devices.
CommTest – Growth in Mobility & Software
CommTest leader David Heard emphasized how CommTest not only test and measures networks, but is an end-to-end network and service enablement partner for service providers. Highlights from Heard’s presentation include:
-Solutions for the Mobility area are currently CommTest’s largest driver with 40 percent of sales; this is expected to increase to 60 percent over the next two years as more people use mobile devices and new services like 4G LTE. JDSU is also gaining traction from the recent wireless test acquisitions of GenComm and Dyaptive.
-CommTest expects long-term improvement to its business model as it moves to more software-based solutions that provide recurring revenue from subscriptions used by service providers and NEMs.
-JDSU intelligence-gathering solutions PacketPortal & PacketInsight are seeing early stage success. PacketInsight now has 10 customers and 14 trials while PacketPortal has 14 customers and 36 trials.
-The new StrataSync solution introduced last month will also help with network visibility issues and will drive incremental demand as another subscription-based service.
-Heard indicated that the JDSU CommTest division has a #1 position in Ethernet, fiber, CaTV, xDSL, IPTV, Storage and IP/Router transmission.
-New solutions to support small cells are also on their way from JDSU.
Optical Security Products – Cash is Still King
OSP executive Luke Scrivanich discussed how the world is still a cash-driven society and the anti-counterfeiting features that JDSU provides to help protect currency.
-China and India are important regions for OSP due to the high use of paper currency and somewhat sophisticated counterfeiting attempts in these areas.
-JDSU currency pigments and threads are expected to grow beyond the 5% long-term CAGR as they are used to support cash-centric regions and as they are integrated into new banknote redesigns.
JDSU CFO – The Sails Are Up
Our new CFO Rex Jackson closed out the meeting by emphasizing how JDSU is well positioned with a strong financial model and great operating leverage.
As Rex put it “The boat’s in great shape, the sales are up, when we catch wind we’ll be in really great shape.”
One of the financial analyst firms included this quote in their report the following day but it was so good that I had to also share it in my blog post.
JDSU CFO Rex Jackson